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Call It What You Will

Small, indirect, tail-end, small supplier, non-strategic, non-core, tactical, etc.  The list doesn’t go on much longer, but the spend unquestionably does. From our procurement perspective at SDI, indirect spend refers to the sourcing and purchase of goods and services that are not directly incorporated into a manufactured product.

For example, consider the components typically used to construct most computers. Processors, motherboard connector cables, random access memory (RAM) modules and precious metals used for wiring are among the many components used in the direct production and manufacture of laptops. These direct components are considered strategic purchases and are judiciously sourced and purchased by the procurement unit within the company.

Now consider the support or peripheral products and services that are necessary to market and sell the product – in this example, the laptop. Not quite as strategic and not used directly in the production of the laptop, indirect spend such as office furniture and supplies, maintenance  services, travel, and contingent labor enable the manufacture and sale of the product but are certainly not components.  Since these products and services are indirectly used to facilitate laptop sales, they are referred to as indirect spend.

Often, indirect spend categories are not as judiciously sourced purchased as their direct counterparts.

Why the difference matters

Implementing the trusty 80/20 rule, tail end spend is characteristically referred to as the final 20% of company spend.  The graphic below, courtesy of Capgemini Consulting, crisply depicts the segmentation of the smaller supplier, tail-end base.

supplier_tail

Since this indirect spend is considered non-critical, less strategic and frequently paid to smaller suppliers procurement organizations often employ fewer resources on the cost management of these indirect categories.  Worse, these fragmented costs and spot purchases are not even managed by procurement, but within individual business units that may be unfamiliar with effective procurement methodologies.

Yet, both types of spend are critical to the bottom line of the business.  Efficient cost management of the tail drives increased savings for the enterprise.  Reaping significant savings can be achieved by applying in-house procurement best practices to all cost categories. Or, relying on a third party with the right expertise.

Not surprisingly, organizations have made small supplier spend a priority in recent years.   Last year, the Hackett Group, recognizing that many procurement organizations, “may be leaving money on the table and deploying their resources inefficiently is in the low-value purchasing generally known as tail spend, “conducted a webinar to share their insights on small supplier best practices.

But not all companies are equipped to manage the complexities of smaller spend in-house. They rely on third party service providers such as SDI, whose primary focus is supply chain optimization. At SDI, we are a full lifecycle Business Process Outsourcing and Managed Services provider with extensive proficiency in small supplier, non-critical, tail-end spend.

You can learn more here on how we can deliver immediate and long-term benefits for you, as we have for many of our Fortune 500 customers.


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Funding Your New Bu$iness Venture

Earlier this month I blogged the desire to strike out on one’s own and launch a small business.

Easier said than done?

We all need a hand up occasionally, especially when faced with important decisions or funding large projects (home down payments come to mind). So too for the budding entrepreneur.  Fortunately, there are vital resources available to get your business from business plan to revenue reality.  Here are just a handful of sources that may provide the lucrative funding a promising business venture may pursue.

Small Business Administration (SBA)

Officially established over 60 years ago, through an act of Congress, the United States Small Business Administration was created to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” Within less than a year of origination, the SBA was not only giving and guaranteeing business loans to small businesses; they were offering technical support and business training as well.

By year-end 2015 the SBA had approved over 30B worth of loans – not only giving a hand up to small businesses but driving economic growth simultaneously. Additionally, the SBA offers programs specifically designed to help develop and grow minority– and women-owned businesses.

Minority Business Development Agency (MBDA)

Working with multiple government entities and partnerships the MBDA is principally a U.S. agency that champions growth and international competitiveness of minority-owned businesses.  The MBDA can help gain access to capital and contracts via their nationwide network of business centers. These centers are manned with professionals armed with the expertise to offer financial counseling and growth strategies.

Crowdfunding

While the term crowdfunding might be fairly self-explanatory, that is funding a new venture or project product launch through the financial patronage of others (“the crowd”); the basics require old-fashioned sales and marketing skills.

Who are the members of the crowd? Family, friends, banks, enthusiastic backers, and angel investors are among the many.

Be prepared to create a compelling business case and marketing pitch to effectively showcase your ideas to potential investors. These investors, in turn, hope to reap the rewards –or equity- from your brilliant idea, flawless execution and eventual success.

Where to start

Other than old fashioned email solicitations, face to face requests or telephone tag there are a several platforms available to facilitate the collection of capital. Although hundreds of crowdfunding sites exist, the top sites for harvesting capital can be found here:

Digital trends list these sites as the best for 2016, while TechBullion lists these as the best sites to watch in 2017. Note: Kickstarter, Indieogogo and GoFundMe appear on both lists.

Grants

Lest we forget, grants (which you do not need to pay back) are a terrific resource to grow your business. Federally funded Grants.gov might not offer seed money for burgeoning enterprises, but once business is off the ground, there are a variety of options to assist with expanding the new venture. The government website is easy to navigate and is updated regularly to reflect new monies accessible.

2017 just may be the year for your breakaway move.


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Striking Out in the New Year

Striking Out in the New Year

We’re at the end of one year and start of the next. Which means that enduring tradition is upon us: making and upholding (with varying degrees of success) New Year’s resolutions.

Often, our resolutions are simple: shed a few pounds. Write more ‘thank you’ notes. Learn a new recipe or two. But for those with big ideas and an entrepreneurial spirit, why not try a resolution that’s a bit more ambitious?

Many among us harbor the desire to strike out on our own and launch our own small business (that, with hard work, will hopefully blossom into a medium- or large-scale business). But uncertainty often prevents these desires from becoming more than daydreams.

Why not change that in 2017? Here are four reasons for kicking off a career where you’re the founder:

  • You’ll be in good company. According to the Unites States Department of Labor, Bureau of Labor Statistics, entrepreneurship has been on the rise since 2010. That’s a good thing — for the entrepreneurs and national economy both. These new business embolden the labor market, drive competition, and create new jobs.

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  • Staff a winning team. Colleagues can be the best part of a job — but also the worst. When chemistry is lacking or personalities clash in the workplace, success suffers: deadlines are misses, customers are dissatisfied. Now, imagine hand-picking all those who work around you. Enticing, right? When you’re at the helm, you’re empowered to select the people and personalities that best suit you.
  • Strike the perfect work-life balance. First, let’s be clear: Working for yourself doesn’t mean not working. Without that dependable, twice-a-month paycheck, the pressure is on to perform and provide. But you’re also free from the 9-5 workday. As your own boss, set a schedule that accommodates your life. Suddenly, starting later or stepping out midday is perfectly OK

                           LINK: http://www.inc.com/guides/201101/top-10-reasons-to-run-your-own-business.html

Some of us use resolutions to change smaller things in our life, such as shedding extra pounds or promptly sending out creative thank you notes. But this year it just may be time to think big with a life changing decision.  Like breaking away and starting the business you have been envisioning for years.


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Collaborating… Innovatively

Remember chat rooms?

During the internet’s nascency, volumes of chat rooms materialized covering a copious array of topics for the like-minded, or perhaps the not so like-minded, to meet virtually and engage in rigorous discussion.

America Online (AOL) not only popularized the use of chat rooms, but quickly developed a more personal method of information swapping when they unleashed AOL instant messenger on dial-up internet users.  In fact, according to the Washington Post, “by 1997, the year AOL launched Instant Messenger as a stand-alone chat product the company boasted an estimated 19,000 chatrooms.  Users spent more than a million hours chatting each day.”

Long ago, during in the pre-digital analog era, global inhabitants had been chatting –most likely face to face, prior to the advent of the telephone – for thousands of years; for simple social interaction, information exchange or collaboration.

Now, as part of the Internet of Things (the interconnectedness of software-driven smart devices, cloud computing and networking), chat has become the popular kid in the digital neighborhood.

Why the renewed appeal of digital “chatting”?

Anonymity plays a part, particularly among social players. But the instant media, information and data sharing provides considerable benefits to business users. Last year Fast Company, the American business magazine, reported, “The long-lost chat room is experiencing a renaissance, and social media companies new and old are hoping to capitalize on the trend.” Due to group chat’s rapid and real-time interactive ability, it is no surprise this tool has emerged as a highly effective and functional way for business communication, flow of knowledge and collaboration. Not quite a complete replacement for email, conducting business via group chat does impressively diminish the inbox clog resulting from iterative, replay-all messaging.

Very recently, the Wall Street Journal not only proposed that group chat has surfaced as the hottest thing in IT, but that “chat is becoming the backbone of many businesses, bringing together both people and multiple software programs.”

What this means for supply chain operations.

Imagine an interface that integrates customer and supplier conversations with back-end applications where extended team players can swiftly and effectively resolve business issues with real-time player engagement and file sharing.

For example, you might have a customer who has very specific requirements for a commodity… at the right price. Armed with the right software and data, through real-time participation among customer, procurement, supplier and –if necessary – second tier suppliers, the lowest cost commodity with optimal specifications may be quickly achieved.

It just may just be time to eliminate endless email threads, unreturned phone calls and detached conference call participants.


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Millennials are reshaping the traditional workplace

75.4 million is a pretty big number.

This staggering number represents, as of 2015, the United States’ population of millennials. “Millennials” is the moniker given to the individuals born in the late 80s, 90s, and early 00s.

millennial-grpah

As a sizable segment of the workforce, millennials are now exerting major influence in the professional realm. More and more organizations are seeking young, digitally-savvy professionals for their ranks – and as a result, millennials are reshaping how business is done. Chief among these changes? A break from the traditional – and sometimes stodgy – workplaces we’ve so long taken for granted.

This is most apparent at today’s leading technology companies, headquartered in West Coast enclaves like San Francisco and Seattle. Gone are the grids of cubicles and pinstriped suits, replaced by open floor plans, untucked shirts, and even luxuries like billiards tables, arcade games, and a beer tap or two.

A workplace peppered with amenities like these would have been unthinkable – perhaps laughable – only a couple decades prior. But baby boomers shouldn’t be so surprised. The driving force behind this trend is all too familiar: Competition for intellectual capital. Now when leading businesses are seeking top talent, a generous bonus or extra week of vacation won’t do the trick. A modern (and lavish) workplace is a necessity, too.

Let’s look at some key examples. (And it’s worth noting one of these two organizations is outside of the tech industry.) The Huffington Post – the New York City-based online media giant – has designated “nap rooms” for employees. Workers are encouraged to take a chunk of time and rest up during busy days. Sound excessive? Huffington Post founder Arianna Huffington doesn’t think so. “Arianna: Office Nap Rooms Will Soon Be As Common As Conference Rooms Naps,” reads one news article headline about the amenities.

In reporting this piece, I spoke with a colleague’s son, Kevin, a millennial working for a U.S.-based software company. Kevin notes his company’s offices feature a free snack bar and ping pong table. But Kevin doesn’t use them often – he works from home.

“For a lot of millennials, myself included, the ability to work remotely is the greatest perk of all,” Kevin says. “Modern offices are great – but so is no commute.”

In working from home, Kevin and his fellow millennials may have the best offices of all: Their couch, kitchen, and dog are just a few steps away.


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Ladies, How is Your Pay Gap?

Imagine a shopping spree in your favorite tech store, sporting good shop or the local grocery.  After taking time to assemble a basket of worthy goods, it’s off to the checkout for the next and final stop. The cashier rings up your acquisitions and promptly informs you that there is a surcharge… because you are a woman.

Unheard of!  While it is highly unlikely this would happen anywhere in the civilized world, it does beg a more serious question.

If women pay similar rates for goods and services as men, then why are women often not paid similar rates for the same services rendered?

Gender pay gap is not new news and the battle for equality has been fought for years. Many questions can be asked… and answered. Which occupations have the greatest gap, which sectors have had success closing the gap, which countries outperform others?

According to a recent article in the Wall Street Journal, “Women working full-time in the U.S. last year earned 82.5 cents for every dollar a man earned, according to the Labor Department’s weekly wage data. There are disparities across regions and occupations.” The largest gender gap is in the legal profession where women’s weekly earnings are a mere 56.7% of men’s.

The table below concisely illustrates the salary differential among select careers.  Curiously, construction, a field traditionally dominated by men for years, boasts the smallest gap –but a gap nonetheless.

pay-dis

Certainly one might not expect Hollywood, long considered a bastion of progressivism, to have any role in gender pay gaps, yet that is not the case. The leaked emails from Sony Pictures proved to be quite an embarrassment when it was revealed that the A-list actresses in the Oscar nominated film American Hustle major were paid less than their A-list male counterparts.  Actress Patricia Arquette vocalized her dismay on Hollywood wage inequality while accepting her Academy Award for her role in Boyhood.

Geographically, there is a significant gap in the, well, gaps. Sadly, but astutely reported by Business Insider, “There’s no country in the world where women earn more than men.”  Especially, in South Korea where the world gender pay disparity was the greatest.  This infopic, from Bank of America Merrill Lynch’s 2016 “Transforming World Atlas” report is a snapshot summary of wage inequality from 2011 through 2014.

New Zealand, with the narrowest pay gap in the world, still manages to pay women 5.6% less than men for performing the same work.

world-pay-gap

After reviewing such discrepancies one can’t help but wonder… what is being done about gender parity?

The United States passed the Equal Pay Act in 1963 when women were earning 59% of men’s earnings. According to a recent White House fact sheet, by 2013 women were paid an average of 77 cents for every dollar paid to men. However, the report outlines several new initiatives to end wage disparity such as passing the Paycheck Fairness Act and establishing a National Equal Pay Enforcement Task Force.

Optimistically, similar programs will be deployed worldwide. Let’s be confident and hope the next set of statistics demonstrates significant progress.


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Why Outsource?

Mowing the lawn, housework, car repair and general maintenance. The aforementioned essential domestic tasks are likely performed in millions of households around the world.  But who is actually doing them?

Busy schedules, long work weeks and family obligations have led many of us to outsource these time consuming chores.   Maybe we simply don’t enjoy taking on these responsibilities or, worse, perhaps we lack the basic ability to complete them. Either way, millions of people rely on resources outside the home to perform tasks we rarely consider one of our core competencies. Limited by time, we earn our living doing what we do best and outsource the services we are less efficient at accomplishing. All the more reason to increasingly outsource as our lives become more complex.

Equally so, in business.

outsource graph

Last year, the Everest Group, a management consulting and research firm that advises clients on the development and execution of  business services and global IT strategies, provided market insight indicating an accelerating growth of outsourcing, partly due to increased activity in newer services segments.

Why are companies delegating processes to third party vendors? Outsourcing allows businesses to keep focused on their core business, lower their administrative expenses and increase their operating income.

Ranking highly among frequently outsourced business processes is supply chain management, often not a core competency for numerous enterprises. Driven by high potential for cost reduction, flexibility and execution of best practices businesses are increasingly leveraging BPO (Business Process Outsourcing) services, such as Accenture, IBM and SDI to gain competitive advantage.

Further fueling and facilitating this growth are digital platforms.

In its Technology Vision 2016 report, Accenture, a global professional services and consulting company, forecasts that 25% of the world’s economy will be digital by 2020. TMT Industry Insider, providing a succinct summary of the report said, “The global consulting firm contends that we are witnessing a major technology revolution, specifically a digital revolution. It’s a revolution of emerging ‘digital platform’ comprised of cloud services, artificial intelligence, cognitive computing, predictive analytics and intelligent automation.

These platforms transform and replace traditional business processes in areas such as finance & accounting, HR, marketing, procurement, supply chain and more. To quickly leverage these digital solutions, companies increasingly look to outsource traditional in-house functions to third party providers in what are referred to as BPO transactions.”

Not surprising. Digitization facilitates the execution of seamless business processes.

In a joint effort, Supply Chain Digest and JDA Software deconstructed the supply chain process to identify which sub-processes gained the greatest value from digitization-related technologies.  As represented in the visual below, published as Supply Chain Digest’s graphic of the week,

graphic week

supply chain visibility – the ability to track products or services from the point of origin to final destination –tops the list. Advanced analytics is a near second. The proliferation, availability and analysis of raw data allows companies to swiftly make better business decisions.

At SDI, leveraging these innovative technologies and techniques is a priority. As you focus on your business strengths let us partner with you to proficiently improve your bottom line.